Beachcomber Management Pty Ltd ATF Kafritsas Family Trust v Body Corporate for the Surfers Beachcomber [2014] QCAT 453

CITATION: Beachcomber Management Pty Ltd ATF Kafritsas Family Trust v Body Corporate for the Surfers Beachcomber CTS 10411 [2014] QCAT 453 PARTIES: Beachcomber Management Pty Ltd ATF Kafritsas Family Trust (Applicant) v Body Corporate for the Surfers Beachcomber CTS 10411 (Respondent) APPLICATION NUMBER: OCL061-14 MATTER TYPE: Other civil dispute matters HEARING DATE: 10 September 2014 HEARD AT: Brisbane DECISION OF: Member Hughes DELIVERED ON: 11 September 2014 DELIVERED AT: Brisbane ORDERS MADE: 1. The parties have leave to be legally represented; 2. Upon the undertaking of Beachcomber Management Pty Ltd ATF Kafritsas Family Trust as to damages (“Beachcomber”), the Body Corporate for the Surfers Beachcomber CTS 10411 (“Body Corporate”) whether by its servants, agents, employees or otherwise, is: 2.1 restrained from terminating or attempting to terminate the Buyer’s Caretaking and Letting Agreement dated 27 March 2003 (as varied and assigned) (“Agreement”) between the Body Corporate and Beachcomber: (a) in reliance on the resolution by the -- 1 of 10 -- 2 Body Corporate to terminate the Agreement arising from the extraordinary general meeting dated 26 July 2014; (b) in reliance on any resolution by the Body Corporate to terminate the Agreement arising from the extraordinary general meeting to be held on 13 September 2014 (or at any adjournment of that general meeting); (c) in reliance on any of the remedial action notices the subject of these proceedings; or (d) including, without limitation, the giving of any notice pursuant to section 126 of the Body Corporate and Community Management Act 1997; without first obtaining the written consent of: (e) Beachcomber; and (f) Beachcomber's financier (Suncorp-Metway Ltd ABN 66 010 831 722 (“Financier”), until these proceedings are determined or upon the earlier Order of the Tribunal or agreement of the parties and, in any event, without first giving twenty-one (21) days prior written notice of its intention to do so (“Notice to Proceed”) to: (g) Beachcomber; and (h) the Financier, which notice must be sent: (i) by email to [email protected]; (ii) by facsimile to (07) 3031 2306; and (iii) by post to the attention of Mr Edwin Brak at: Suncorp Bank GPO Box 1453 -- 2 of 10 -- 3 BRISBANE QLD 4001 2.2 to reserve to the Financier the right to exercise its rights pursuant to Chapter 3, Part 2, Division 4 of the Body Corporate and Community Management Act 1997 (Qld) for a period of twenty- one (21) days commencing on the date any Notice to Proceed is served in accordance with sub- paragraph 1.1 of this Order; and 2.3 to permit the Financier to exercise, and acknowledges that it will be permitted to exercise, its rights pursuant to Chapter 3, Part 2, Division 4 of the Body Corporate and Community Management Act 1997 (Qld) for a period of twenty-one (21) days commencing on the date any Notice to Proceed is served in accordance with sub-paragraph 1.1 of this Order. 3. The Body Corporate shall pay Beachcomber’s costs of this application on a standard basis calculated on the District Court Scale within 28 days of agreement or assessment. 4. Beachcomber shall deliver an assessment of its costs to the Body Corporate by 26 September 2014. 5. The Body Corporate shall deliver any response to Beachcomber’s assessment by 10 October 2014. 6. If the parties cannot agree on an amount for costs by 24 October 2014, costs shall be determined by an assessor appointed by the Principal Registrar. CATCHWORDS: INTERIM INJUNCTION – whether balance of convenience to include financier in terms of injunction – where prejudice to body corporate manager from risk of financier appointing receiver in absence of terms -- 3 of 10 -- 4 satisfactory to financier - where no prejudice to body corporate - COSTS – whether body corporate acted reasonably in adopting adversarial position to terms by which it was not prejudiced - where use of resources disproportionate to application – where contrary to objects of Queensland Civil and Administrative Tribunal Act 2009 - whether costs in interests of justice Body Corporate and Community Management Act 1997, sections 100 and 126 Body Corporate and Community Management (Accommodation Module) Regulation 2008, section 42 Queensland Civil and Administrative Tribunal Act 2009, sections 3, 4, 28, 43, 58, 59, 100 and 102 Australian Coarse Grain Pool Pty Ltd v. Barley Marketing Board of Queensland (1985) 157 CLR 605 Body Corporate for Sunnybank v. Coming Home Pty Ltd ATF The Coming Home Trust [2014] QCAT 192 Chras Straker Pty Ltd as trustee for Dianne Crea Family Trust and Anor v. Orsay Holdings Pty Ltd [2011] QCAT 676 F.K. Gardner & Sons Pty Ltd v. Grant [2010] QCAT 585 Greg Black Constructions Pty Ltd v. Brodie and Anor [2011] QCAT 671 Ralacom Pty Ltd v. Body Corporate for Paradise Island Apartments [2010] QCAT 334 Ralacom Pty Ltd v. Body Corporate for Paradise Island Apartments (No. 2) [2010] QCAT 412 Rintoul v.State of Queensland & Ors (No. 2) [2014] QCAT 332 APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr B. W. J. Kidston of Counsel instructed by Mahoneys Lawyers RESPONDENT: Mr C. J. Carrigan of Counsel instructed by Short Punch Greatorix -- 4 of 10 -- 5 REASONS FOR DECISION What is this Application about? [1] Beachcomber Management Pty Ltd ATF Kafritsas Family Trust and the Body Corporate for the Surfers Beachcomber CTS 10411 could not agree on the wording of interim Orders. [2] The Tribunal must therefore determine whether to grant interim Orders to restrain the Body Corporate from terminating its Caretaking and Letting Agreement with Beachcomber. Legal representation [3] Despite either party failing to file any application or supporting material prior to the hearing to demonstrate legal representation being in the interests of justice1, at the commencement of the hearing I granted leave for both parties to be legally represented. [4] I have delivered oral reasons to the effect that leave was granted on the basis that legal representation would assist the Tribunal resolve the issues in dispute. [5] Nevertheless, parties should not presume that legal representation will be granted as a matter of course. The Tribunal’s governing legislation prescribes that parties represent themselves unless the interests of justice require otherwise, consistent with the Tribunal’s mandate to deal with matters in a way that is accessible, fair, just, economical, informal and quick.2 [6] A party who wishes to depart from the primary position of self- representation prescribed by the Legislature needs to apply to the Tribunal. It is neither “fair” nor “just”, nor consistent with overriding principles of natural justice3 that applications are made on the day of the hearing without notice to the other party or the Tribunal.4 What is the dispute about? [7] The Body Corporate sent Remedial Action Notices to Beachcomber dated 11 December 2013, 22 March 2014 and 27 March 2014. The notices include alleged failing to maintain the common property,5 failing to report hazards and issues requiring repair,6 failing to reside in the caretaker’s 1 As required by the Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 43. 2 Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 3(b). 3 As prescribed by the Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 28(3)(a). 4 Consistent with recent observations of the President of the Tribunal in Rintoul v.State of Queensland & Ors (No. 2) [2014] QCAT 332 at paragraphs [24] to [27]. 5 Remedial Action Notice dated 11 December 2013 and 27 March 2014. 6 Remedial Action Notice dated 27 March 2014. -- 5 of 10 -- 6 unit,7 failing to be present during agreed hours8and engaging employees or agents without body corporate consent.9 [8] On 26 July 2014, the Body Corporate passed a motion to terminate the Caretaking and Letting Agreement for Beachcomber’s alleged failure to remedy those notices. The Body Corporate is convening another Extraordinary General Meeting on 13 September 2014 to pass further motions to terminate the Agreement. Is an interim injunction appropriate? [9] A legally qualified member of the Tribunal may grant an interim injunction if just and convenient.10 The usual test to determine whether to grant an interim injunction is whether there is a serious question to be tried and the balance of convenience.11 [10] The Body Corporate acknowledged that the determination of these issues favoured an injunction.12 [11] That the Body Corporate has acted and has foreshadowed further action to terminate the Agreement is a serious matter.13 [12] The balance of convenience also favours an injunction. To not grant an injunction will cause significant detriment to Beachcomber of the loss of its business. Granting the injunction will not prejudice the Body Corporate because Beachcomber will continue its duties under the Agreement until a final determination of the dispute. [13] The Tribunal may require an undertaking about costs or damages.14 Beachcomber incorporated an undertaking for damages as part of the terms of its proposed Order. [14] I am therefore satisfied that it is just and convenient to grant an interim injunction. What are the appropriate terms of the injunction? [15] The key difference between the wording proposed by Beachcomber and the Body Corporate is that the wording proposed by Beachcomber provides for the position of Beachcomber’s financier. 7 Remedial Action Notice dated 11 December 2013 and 22 March 2014. 8 Remedial Action Notice dated 11 December 2013. 9 Remedial Action Notice dated 11 December 2013 and 22 March 2014. 10 Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 59(1) and (4). 11 Chras Straker Pty Ltd as trustee for Dianne Crea Family Trust and Anor v. Orsay Holdings Pty Ltd [2011] QCAT 676 at paragraph [10], citing with approval Australian Coarse Grain Pool Pty Ltd v. Barley Marketing Board of Queensland (1985) 157 CLR 605. 12 Body Corporate’s Response To The Application For Interim Injunction filed 9 September 2014 at paragraph 1.1. 13 Ralacom Pty Ltd v. Body Corporate for Paradise Island Apartments [2010] QCAT 334 at paragraph [13]. 14 Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 59(6). -- 6 of 10 -- 7 [16] Justice and convenience15 requires an order sufficient to protect Beachcomber’s position for the duration of the proceeding.16 [17] Beachcomber has applied for final orders relating to the validity of the Body Corporate’s Remedial Action Notices and its right to terminate the Agreement. Beachcomber essentially wants the Tribunal to declare invalid the notices and the motion to terminate the Agreement. [18] The position that Beachcomber seeks to protect is the continuation of its Agreement with the Body Corporate and thereby preserve a major asset. [19] The legislation requires that the body corporate give notice to the financier before terminating a financed contract and that circumstances exist under which the body corporate had the right to terminate.17 This means that if the body corporate is restrained from terminating a financed contract, then the preconditions for the financier to appoint a receiver being appointed under the legislation have not been met. The Body Corporate contends that the references to Beachcomber’s financier are therefore superfluous. [20] However, the legislation does not restrain the financier from appointing a receiver for reasons other than the body corporate’s notice of its right to terminate the Agreement.18 Beachcomber’s financier has stated that it will appoint a receiver unless an order has been made “enjoining the body corporate from terminating”.19 Ominously, the financier adds that this is because of “the resolution to terminate, of itself and without more, being an event of default under the terms of the bank’s security”.20 [21] That the resolution to terminate itself is an event of default potentially giving the financier the right to appoint a receiver21 suggests that the terms incorporating the financier proposed by Beachcomber are not superfluous. [22] The financier foreshadowing its appointment of a receiver based solely on the body corporate’s resolution to terminate favours an injunction in terms to prevent this risk. The risk arises from the body corporate’s own resolution to terminate. [23] Any attempt by the financier to appoint a receiver prejudices Beachmere by transferring control of a major asset with net realisable equity of $2.5M22 generating annual income of $330,00023 - cross-collateralised by 15 Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 59(1). 16 Ibid s 58(1)(a). 17 Body Corporate and Community Management Act 1997 (Qld) s 126(1). 18 As noted by the solicitors for the Body Corporate – see letter Short Punch & Greatorix to Mahoney Lawyers dated 9 September 2014. 19 Email Peter Smith, Partner, Herbert Smith Freehills to Ben Seccombe, Mahoneys dated 9 September 2014. During the hearing, Beachcomber’s solicitor also stated that the financier insists, or at least prefers, the terms of the Order proposed by Beachcomber rather than those of the Body Corporate. 20 Email Peter Smith, Partner, Herbert Smith Freehills to Ben Seccombe, Mahoneys dated 9 September 2014. 21 Suncorp Personal Property Security Agreement, Part 16. 22 Affidavit of Greg Kafritsas sworn 8 September 2014 at paragraph 67(e). -- 7 of 10 -- 8 a finance facility with a balance of $2,478,245.1924 - from Beachcomber to a third party, with the consequential risk of that asset’s devaluation, loss of income and the entire facility amount becoming due and payable. [24] Incorporating the financier into the terms of the injunction does not prejudice the Body Corporate. It could mean the Body Corporate having to deliver an additional notice to the financier by email, facsimile and an additional postal address. That is not prejudice. At worst, it is a minor inconvenience. [25] This inconvenience to the Body Corporate does not outweigh the potential prejudice to the Beachcomber as the owner of a secured asset of not meeting its financier’s requirements. [26] The balance of convenience therefore favours an interim injunction in terms sufficient to satisfy the financier to not proceed to appoint a receiver. Those are the terms proposed by Beachcomber. What is the appropriate costs order? [27] Costs in the Tribunal are not awarded as a matter of course. Each party must pay their own legal costs,25 unless the interests of justice require the Tribunal to order a party to pay the costs of another party.26 [28] There is therefore a strong indicator against awarding costs: Under the QCAT Act the question that will usually arise in each case in which costs are sought is whether the circumstances relevant to the discretion inherent in the phrase ‘the interests of justice’ point so compellingly to a costs award that they overcome the strong contra- indication against costs orders in s 100.27 [29] In deciding this, I may regard prescribed circumstances.28 The Tribunal’s discretion is broad.29 [30] The apposite circumstance here is the disproportionate use of resources generated by the Body Corporate’s adversarial position to terms that caused it minimal, if any, grief. [31] The Body Corporate submitted that it could not consent to the terms proposed by Beachcomber because the decision is a restricted issue requiring a general meeting of the body corporate.30 23 Affidavit of Greg Kafritsas sworn 8 September 2014 at paragraph 67(b). 24 Affidavit of Greg Kafritsas sworn 8 September 2014 at paragraph 56. 25 Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 100. 26 Ibid s 102. 27 Ralacom Pty Ltd v. Body Corporate for Paradise Island Apartments (No. 2) [2010] QCAT 412 at paragraph [29]. 28 Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 102(3). 29 Body Corporate for Sunnybank v. Coming Home Pty Ltd ATF The Coming Home Trust [2014] QCAT 192 at paragraph [16]. 30 Pursuant to the Body Corporate and Community Management Act 1997 (Qld) s 100. -- 8 of 10 -- 9 [32] Even if the decision was a restricted issue, this did not prevent the Body Corporate from taking a position to neither consent nor object to the terms. Indeed, the Body Corporate did precisely that when proposing its own terms, via its solicitors.31 This shows that the Body Corporate was able to negotiate and indeed was doing so through its solicitors, presumably upon instructions from an authorised representative of the Body Corporate. [33] The Body Corporate has a statutory obligation to act reasonably in performing its functions.32 The Body Corporate had no reasonable basis to take the point during its negotiations. The additional terms relating to Beachcomber’s financier had minimal impact on the Body Corporate. The Body Corporate knew the financier had foreshadowed appointing a receiver based solely on the Body Corporate’s Remedial Action Notices. The Body Corporate could therefore reasonably have neither consented to nor opposed the terms sought by Beachcomber and left if for the Tribunal to decide. [34] The Tribunal is mandated to ensure proceedings are conducted speedily, with a minimum of expense and inconvenience.33 It must encourage the early and economical resolution of disputes.34 It must ensure proceedings are conducted in an informal way that minimises costs to parties and is as quick as is consistent with achieving justice.35 It must act with as little informality and technicality and with as much speed as proper consideration of the matter before it permits.36 [35] With the privilege of legal representation in the Tribunal comes the responsibility to assist the Tribunal achieve these objectives: The parties may wish to continue these proceedings in an unnecessarily adversarial role but it is not something that the tribunal will condone or encourage… the privilege of legal representation in the tribunal does not come without obligation. The lawyers’ obligation is to assist the tribunal in providing accessible, fair, just, economical, informal and quick dispute resolution. That necessarily requires the lawyers to concentrate on the merits of the dispute rather than positional skirmishes.37 [36] The Body Corporate directed much argument to the terms being superfluous. For this and to avoid the modest impost of having to generate an additional notice to be delivered to three additional addresses, the Body Corporate engaged solicitors, briefed experienced Counsel to appear and filed 367 pages of material on 9 September 2014 - the day before the hearing and in breach of the Tribunal’s direction for the Body and Body Corporate and Community Management (Accommodation Module) Regulation 2008, section 42(1). 31 Letter Short Punch & Greatorix to Mahoney Lawyers dated 2 September 2004. 32 Body Corporate and Community Management Act 1997 (Qld) s 94(2). 33 Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 3 and 4. 34 Ibid s 4(b). 35 Ibid s 4(c). 36 Ibid s 28(3)(d). 37 Greg Black Constructions Pty Ltd v. Brodie and Anor [2011] QCAT 671 at paragraph [18] citing with approval F.K. Gardner & Sons Pty Ltd v. Grant [2010] QCAT 585. -- 9 of 10 -- 10 Corporate to file its material by 3 September 2014.38 Beachcomber itself filed 422 pages of material the day before the hearing and briefed Counsel. [37] All this, to argue simply about whether to incorporate Beachcomber’s financier into the injunction. [38] The Body Corporate was not prejudiced by the terms. Based on the lengthy correspondence between the legal representatives, the Body Corporate knew or should reasonably have known of the significant prejudice to Beachcomber from not including the terms. The Body Corporate could and should have refrained from its unnecessarily adversarial position about the terms. It did not. [39] This is disproportionate to the issue in dispute and has unnecessarily escalated costs for both parties and unnecessarily incurred upon the Tribunal’s limited resources. [40] This is not to be encouraged. The interests of justice warrant that the Body Corporate pay Beachcomber’s costs on a standard basis on the District Court scale. [41] It is unfortunate that most of these costs are likely to be passed onto individual lot owners, most of whom are not responsible for providing instructions on behalf of the Body Corporate in this dispute. Instead, it would appear that instructions are provided on behalf of the Body Corporate via its committee. [42] The parties are reminded that if the Tribunal considers a representative of a party to a proceeding, rather than the party, is responsible for unnecessarily disadvantaging another party to the proceeding, the Tribunal may order costs requiring that representative to pay a stated amount as compensation for the unnecessary costs.39 38 Directions dated 28 August 2014 at paragraph 1. 39 Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 103. -- 10 of 10 --